Summary

-Investment/Risk Philosophy Trading Methodology - Discretionary. I constantly evaluate the economic, political and social environments, as well as study price charts for potential trades. However, the final decision to buy or sell is often more intuitive than systematic. In my opinion, trading commodities is much like playing baseball, 70% of the time a player strikes out and 30% they get a hit with an occasional home run or the rare grand slam. And mind you, a .300 batting average is considered to be very good, even for professionals. The same applies to profitable trading. Yet, even with only a 30% or less profitable trade ratio, it is still quite possible to make profits. How? By using disciplined money management principles such as using trade stops, limit losing trades to only a small percentage of trade equity, adjusting margin/equity ratios to volatility and look for potential trades that offer a high reward/risk ratio. Clearly, speculation in the futures markets is not appropriate for everyone because it requires the financial resources and the emotional temperament to handle the volatility. Just as it is possible to realize substantial profits in a short period of time, it is also possible to incur substantial losses in a short period of time. Trading the futures markets is also a very frustrating business because one is wrong more often than one is right. Even with profitable trades, there is the frustration of knowing (in hindsight) that you could have made more if you had stayed in longer or exited earlier, traded more contracts, etc, etc. So how should an investor manage the financial and the emotional demands of a speculative investment in the futures markets? First, mentally accept the fact that this type of investment is based on volatility and uncertainty. Erratic performance is a natural extension of this environment. Second, limit any investment in futures to only a small portion of your investment capital. Third, set a percentage amount of equity risk. If your account decreases by certain percentage, then re-evaluate your investment and/or close your account. Do not try to armchair quarterback every trade. Fourth, if your account realizes significant profits, (No claim is made that trading results will be profitable or that losses could not occur), then take some equity out and diversify into other investments, thereby keeping your investment in futures too only a small percentage of your investment capital